IAB Chief: 'Ad-Blocking Profiteers' Growing Threat to Digital Media

"For-profit providers of software that blocks ads from appearing on websites...'ad-block profiteers,' as I call them, are stealing from publishers, subverting freedom of the press, operating a business model predicated on censorship of content, and ultimately forcing consumers to pay more money for less -- and less diverse -- information," Randall Rothenberg, president/CEO of the Interactive Advertising Bureau, charged in a speech to the Media Institute in Washington Sept. 9.

And although federal efforts to regulate Internet advertising have subsided, state and local governments are increasingly trying to put restraints on the industry, Rothenberg said in a speech entitled "Advertising, Consumer Choice and the Future of Media.”

He characterized the ad-blocking business as "a protection racket" the tells Web publishers, "Pay up, or we’ll break your windows!" Rothenberg cited three companies -- all based off-shore (Ad-block  Plus from Germany, Shine from Israel and Horizon Ventures from Hong Kong) as the major offenders who "want to tell everyone else what they can and cannot read and watch and hear -- self-proclaimed libertarians whose liberty involves denying freedom to everyone else."

"The ad-block profiteers are building for-profit companies whose business models are premised on impeding the movement of commercial, political and public-service communication between and among producers and consumers," Rothenberg said.

He cited IAB research that found one-third of U.S. Web users -- and 41% of millennials -- have installed ad-blocking software on at least one device.

Rothenberg acknowledged that "intelligent, well-meaning critics of advertising, marketing and media" continue to voice concern about the potential for digital marketing to violate personal privacy," adding, "The sad fact is, the digital advertising industry has run roughshod over our own users, delivering ugly pages overwhelmed by ads that are slow to load and increase consumer distrust of the medium."

Rothenberg conceded that government proposals "had the laudable and necessary goal of protecting user privacy, all of them extended the definition of privacy beyond historical norms." He said that subjecting to government oversight "any and all data that is used to underpin the functions of the Internet" prevents advertisers from using material "even if that data cannot compromise an individual’s identity, let alone cause him or her any harm."

"While privacy remains an even greater, legitimate concern for Americans than ever, I am pleased to say that the threat of errant Congressional or regulatory actions appears to have subsided because of industry’s strong adherence to self-regulation," he said. Rothenberg cited industry initiatives such as the new Trustworthy Accountability Group’s “Certified Against Piracy” program that helps marketers identify sites that present an unacceptable risk of misappropriating copyrighted content and selling counterfeit goods, and remove those sites from their advertising distribution chain.

Befitting a tout for the digital advertising industry, Rothenberg recited a litany of data about the stunning growth of online, mobile and other forms of interactive marketing.  Using the same data that Rep. Greg Walden (R-Ore.) cited in a recent speech on cross-ownership, Rothenberg pointed out that for the first time, digital advertising will exceed broadcasting and cable spending combined this year.

"In 2015, marketers spent $60 billion to advertise in digital media – nearly 33% more than marketers spent on broadcast television, the second largest medium," he said. "If current trends continue – and they will – we expect that digital media in 2016 will account for more U.S. ad spend than the broadcast and cable TV industries combined."  

Citing Harvard Business School research, which Rothenberg said will be updated early next year, he hit on a point that appeals to policy makers: Internet advertising employs more than 5.1 million people, nearly a quarter of them in very small firms or sole proprietorships, "in every Congressional district in the United States." The total "Internet advertising ecosystem" was valued at $530 billion a few years ago, he said, and has grown substantially since then.

Tech Standards in Development

Rothenberg also cited reports about cable churn and other factors spurring the growth of online and mobile content, such as a recent Cowen & Company projection that U.S. digital video ad spending will triple by 2020, reaching nearly $30 billion: "larger than today’s cable TV industry."

Rothenberg used that data to extol digital media's ability to delve into new services.

"By tearing down barriers-to-entry in both content creation and distribution, interactive technologies make it possible for an individual to publish a national 'magazine,' make a documentary film, record an original symphony, even program a television network, and seek audiences around the nation and the globe," he said.

"Unlike every other major medium, the Internet is a collectively owned and managed enterprise," he explained. "Whereas a broadcast television network controls and maintains rigorous standards for everything a consumer sees on its channel, an Internet page is a cobbled-together assembly of parts, managed by dozens of independent businesses, each contracted individually by the publisher, ad agencies and marketers."

The IAB chief said that "this decentralized cauldron of innovation" needs "guiding principles" and cited the work of the IAB Tech Lab to provide technology solutions, such as the new LEAN Principles (Light, Encrypted AdChoices-supporting, Non-invasive). Rothenberg called LEAN "the basis for a sustainable advertising ecosystem" and said it will be used in a new rating system that will "measure the user-friendliness of both publishers’ sites and advertisers’ assets."

Gary Arlen

Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.